China's economic reforms have introduced market forces to the domain of urban construction. A market is seemingly evolving to the extent that urban development in China appears to resemble that in the capitalist economies. Once controlled by central plans, urbanization is starting a new chapter in a traditionally rural society. Nevertheless, determined by the gradualist nature of transformation, many old institutions still remain effective. A new framework is formulated along with interactions between new and old institutions. Unique urban development in transition has emerged with the coexistence of plan and market, which makes the transition toward market uncertain. Establishment of a market system is compromised by the remaining plan factors.